2014 (1) TMI 1822 - HC - Companies Law

Scheme of amalgamation - Held that - All the Equity Shareholders of the Applicant Transferor Company (there being no Secured Creditors) have given their approval to the Scheme in form of consent letters, which are placed on record as Annexures D to the application. The certificates from the Chartered Accountant confirming the status of the Equity Shareholders and Secured Creditors of the Company as well as receipt of written consent from all the Shareholders are also placed on record as Annexure E , collectively. In view of the same, the dispensation of the meeting of the Equity Shareholders is sought and is hereby granted.

Summary

Issues:
1. Application under Sections 391 to 394 of the Companies Act, 1956 for Amalgamation.
2. Approval of Equity Shareholders for the Scheme.
3. Convening a meeting of Unsecured Creditors.
4. Notice and publication requirements for the meeting.
5. Appointment of Chairman for the meeting.
6. Powers of the Chairman during the meeting.
7. Quorum for the meeting.
8. Voting by proxy.
9. Determination of the value of the vote of each Creditor.
10. Reporting the meeting result to the Court.

1. Application under Sections 391 to 394 of the Companies Act, 1956 for Amalgamation:
The application was filed by one of the Transferor Companies seeking approval for a proposed Scheme of Arrangement for the Amalgamation of two group Companies with a Transferee Company under Sections 391 to 394 of the Companies Act, 1956.

2. Approval of Equity Shareholders for the Scheme:
All Equity Shareholders of the Transferor Company had given their approval to the Scheme through consent letters, and certificates from the Chartered Accountant confirming the status of Shareholders and Secured Creditors were submitted. Due to unanimous consent, dispensation of the Equity Shareholders' meeting was granted.

3. Convening a meeting of Unsecured Creditors:
A meeting of the Unsecured Creditors was ordered to be convened for the purpose of considering and approving the proposed Scheme of Amalgamation. The meeting was scheduled to be held at a specified location, and a notice along with relevant documents was required to be sent to each Unsecured Creditor at least 21 days before the meeting.

4. Notice and publication requirements for the meeting:
Specific instructions were provided regarding sending notices to Unsecured Creditors and publishing the meeting details in newspapers. The list of Creditors with their addresses needed to be maintained, and a certificate confirming dispatches was required from the Postal Department.

5. Appointment of Chairman for the meeting:
A Director of the Applicant Company was appointed as the Chairman of the meeting, with provisions for an alternate Chairman in case of absence. The Chairman was entrusted with issuing advertisements and notices for the meeting.

6. Powers of the Chairman during the meeting:
The Chairman was granted powers under the Articles of Association and the Companies (Court) Rules, 1959, for conducting the meeting, amending the Scheme, adjourning the meeting, and determining decisions through a poll if necessary.

7. Quorum for the meeting:
The quorum for the meeting of Unsecured Creditors was set at 5 Authorized Representatives present in person or by proxy.

8. Voting by proxy:
Voting by proxy was allowed, subject to filing the prescribed form with the Company's Registered Office at least 48 hours before the meeting.

9. Determination of the value of the vote of each Creditor:
The value of each Creditor's vote was to be as per the Company's Books of Accounts, with the Chairman having the authority to determine the value if entries were disputed.

10. Reporting the meeting result to the Court:
The Chairman was required to report the meeting's result to the Court within 14 days of its conclusion, with the report being verified by affidavit, leading to the disposal of the Company Application.